Do you have a hard time trying to keep track of how much money you’re spending each month? Looking for the perfect gift but don’t want to overspend? Want to know how much your holiday bills will be in order to evenly budget? You’re not alone. Here are some tips and tricks for every type of person with a variety of financial needs!
First, figure out how much you make each month. Take into account your essential expenses and possible extras you spend money on. If it’s hard to estimate your monthly income, find a recent pay stub or tax form that has your yearly salary listed on it. Your taxes are also a good play to estimate your wages. It says it clearly on the first page of your tax report. Many people don’t know how much they make in a year and overestimate the amount of money they have each month. The best way to calculate your annual income is by multiplying the number of paychecks you receive in a year by your net paycheck per paycheck. So if you get a check monthly, multiply your net paycheck by 12. If you get paid every two weeks, multiply your paycheck by 26 pay periods to get your annual income.
Next, we have to calculate expenses. Here are a few general categories to split your budget into:
1. Bills
This includes rent/mortgage, utilities, car payment, credit cards/student loans, food for the month, and insurance payments. If you’re paying off an outstanding bill rather than making regular payments on it, add that to this category as well. You may want to include an “extra” category for any payments you have coming up in addition to the monthly ones (i.e., car registration payment).
2. Gifts
This could include birthdays, holidays, and any other gifts you need to buy throughout the year. List the recipient, date purchased, price, and a short description of the gift. Then you have to set some money aside to reach these goals. So if you want to purchase $100 shoes for someone and you can put away $10 a month. Well, then it is going to take you 10 months to reach your goal.
3. Spending Money
I like to separate this into two categories: what you spend on yourself and what you spend on others. For those who are working hard to save money for a big vacation or new car (or whatever else), this category should be “all about me!”. If you’re just going out with friends or family, then you can put this towards everyone’s share!
4. Extra Money
This is money that you can put towards a big purchase that isn’t already on the list or a regular bill payment that needs to be made. If your car has to be replaced, this is where to go for it.
Once your budget is organized, you’ll be able to see where all of your money goes each month and where it’s coming from.
Now comes the psychological component of the exercise. When tempted to spend money, especially things that are outside of your budget, you should be willing to say ‘no’. But you must say ‘yes’ to savings when you have some money left over at the end of the month.
Useful website links to keep track of your spending:
Mint – Personal finance management tool that is free and easy. The money management and budgeting features are very useful. Mint offers a unique product called Mint Life. It’s an app that allows you to track and manage many different aspects of your financial life from your web browser. One service you get from it is a virtual checkbook, which is very helpful when paying bills or buying things. This website will help you keep track of savings goals and encourage you to save automatically.
– Personal Capital offers free tools like a retirement planning calculator and investment checkup tool. Personal Capital offers a free version of their online investment tool. You can save money by tracking your spending at check out. When you’re buying something, write down how much the item costs and keep that in your purse or wallet for future shopping sessions. Use this website to get a base dollar amount for your regular daily expenses to help you calculate how much money you have left over after paying for all of your bills and essentials.
– YNAB (You Need A Budget) is a popular personal finance software that helps you track your income and expenses.
